Pacific Life Insurance Company
700 Newport Center Drive Newport Beach, CA92660 A Stock Company
ENHANCED GUARANTEED WITHDRAWAL BENEFIT RIDER
Pacific Life Insurance Company has issued this Rider as a part of the annuity Contract to
which it is attached.
All provisions of the Contract that do not conflict with this Rider apply to this Rider. In the
event of any conflict between the provisions of this Rider and the provisions of the Contract, the
provisions of this Rider shall prevail over the provisions of the Contract.
The examples provided in this Rider are based on certain assumptions. They have been provided to
assist in understanding the benefits provided by this Rider and to demonstrate how Purchase
Payments received and withdrawals made from the Contract prior to the Annuity Date affect the
values and benefits under this Rider over an extended period of time.
Withdrawals to Satisfy Required Minimum Distribution
4
Depletion of Contract Value
4
Depletion of Remaining Protected Balance
5
Election to Reset Remaining Protected Balance
5
Continuation of Rider if Surviving Spouse Continues Contract
6
Termination of Rider
6
Rider Effective Date
6
Sample Calculations
7
1
Definition of Terms – Unless redefined below, the terms defined in the Contract will have the same
meaning when used in this Rider. For purposes of this Rider, the following definitions apply:
Annual RMD Amount – The amount required to be distributed each Calendar Year for purposes of
satisfying the minimum distribution requirements of Internal Revenue Code Section 401(a)(9) and
related Code provisions in effect on the Rider Effective Date.
Protected Payment Amount – The maximum amount that can be withdrawn under this Rider without
reducing the Protected Payment Base. The Protected Payment Amount on any day after the Rider
Effective Date is equal to the lesser of:
(a)
5% of the Protected Payment Base as of that day, less cumulative withdrawals
during that Contract Year; or
(b)
the Remaining Protected Balance as of that day.
The Protected Payment Amount will never be less than zero.
Protected Payment Base – An amount used to determine the Protected Payment Amount. The
Protected Payment Base will remain unchanged except as otherwise described under the provisions
of this Rider.
Remaining Protected Balance – The amount available for future withdrawals made under this Rider.
The Remaining Protected Balance will never be less than zero.
Reset Date – Any Contract Anniversary beginning with the first (1st) Contract
Anniversary after the Rider Effective Date or the most recent Reset Date, whichever is later, on
which you elect to reset the Remaining Protected Balance to an amount equal to 100% of the
Contract Value, determined as of that Contract Anniversary.
For purposes of this Rider, the term “withdrawal” includes any applicable withdrawal charges and
charges for premium taxes and/or other taxes, if applicable. Amounts withdrawn under this Rider
will reduce the Contract Value by the amount withdrawn and will be subject to the same conditions,
limitations, restrictions and all other fees, charges and deductions, if applicable, as withdrawals
otherwise made under the provisions of the Contract.
Enhanced Guaranteed Withdrawal Benefit – You have purchased an Enhanced Guaranteed Withdrawal
Benefit Rider. Subject to the terms and conditions described herein, this Rider:
(a)
allows for withdrawals up to the Protected Payment Amount without any adjustment to the
Protected Payment Base, regardless of market performance, until the Remaining Protected
Balance equals zero;
(b)
provides for an annual credit to be applied to the Protected Payment Base and Remaining
Protected Balance as described under the Annual Credit provision of this Rider;
(c)
allows for withdrawals for purposes of satisfying the minimum distribution requirements
of Internal Revenue Code Section 401(a)(9) and related Code provisions in effect on the
Rider Effective Date, regardless of the amount, without any adjustment to the Protected
Payment Base, subject to certain conditions as described herein.
Additionally, on any Contract Anniversary beginning with the first (1st) Contract
Anniversary after the Rider Effective Date or the most recent Reset Date, whichever is later, you
may elect to reset the Remaining Protected Balance to an amount equal to 100% of the Contract Value
as of that Contract Anniversary.
This Rider may be purchased on the Contract Date or on any subsequent Contract Anniversary,
provided:
(a)
the age of each Annuitant is 85 years or younger on the Rider Effective Date; and
(b)
the entire Contract Value is invested according to an asset allocation program
established and maintained by us for this Rider.
The date of purchase is the Rider Effective Date as shown on Page 6.
2
Annual Charge – An annual charge for expenses related to this Rider will be deducted from the
Investment Options on a proportionate basis relative to the Account Value in each such Investment
Option.
The annual charge is deducted, in arrears, on each Contract Anniversary that this Rider remains in
effect. The annual charge is equal to [0.40%] (not to exceed a maximum annual charge percentage of
1.20%) multiplied by the Contract Value on the day the charge is deducted. The annual charge
percentage established on the Rider Effective Date will not change, unless you elect to reset the
Remaining Protected Balance.
If this Rider terminates on a Contract Anniversary, the entire annual charge for the prior Contract
Year will be deducted from the Contract Value on that Contract Anniversary.
If the Rider terminates prior to a Contract Anniversary, we will prorate the annual charge. The
prorated amount will be based on the Contract Value as of the day the Rider terminates. Such
prorated amount will be deducted from the Contract Value on the earlier of the day the Contract
terminates or the Contract Anniversary immediately following the day the Rider terminates.
We will waive the annual charge if the Rider terminates as a result of the death of an Owner or
sole surviving Annuitant, or upon full annuitization of the Contract.
Any portion of the annual charge we deduct from any of our fixed-rate General Account Investment
Options (if available under the Contract) will not be greater than the annual interest credited in
excess of that option’s minimum guaranteed interest rate.
Initial Values – The Protected Payment Base, Remaining Protected Balance and Protected Payment
Amount are initially determined on the Rider Effective Date as follows:
(a)
If this Rider is effective on the Contract Date, the Protected Payment Base and
Remaining Protected Balance are equal to the Initial Purchase Payment.
(b)
If this Rider is effective on a Contract Anniversary, the Protected Payment Base and
Remaining Protected Balance are equal to the Contract Value on that Contract Anniversary.
(c)
The Protected Payment Amount on the Rider Effective Date is equal to 5% of the
Protected Payment Base.
Subsequent Purchase Payments – Purchase Payments received after the Rider Effective Date will
result in an increase in the Protected Payment Base and Remaining Protected Balance equal to the
amount of the Purchase Payment.
Limitation on Subsequent Purchase Payments – For purposes of this Rider, in no event may any
Purchase Payment received on and after the first (1st) Contract Anniversary, measured from the
Rider Effective Date or the most recent Reset Date, whichever is later, result in the total of all
Purchase Payments received since that Contract Anniversary to exceed $100,000, without our prior
approval.
This provision only applies if the Contract permits Purchase Payments after the first (1st)
Contract Anniversary, measured from the Contract Date.
Annual Credit – On each Contract Anniversary after the Rider Effective Date, an annual credit will
be applied to the Protected Payment Base and Remaining Protected Balance if, as of that Contract
Anniversary:
(a)
no withdrawals have occurred after the Rider Effective Date or the most recent Reset
Date, whichever is later; and
(b)
that Contract Anniversary is prior to the sixth (6th) Contract Anniversary, measured
from the Rider Effective Date or the most recent Reset Date, whichever is later.
3
The annual credit is equal to [6%] of the sum of (A) and (B) as of the Contract Anniversary on
which the credit is added, where:
(A)
is the Remaining Protected Balance on the Rider Effective Date or the most recent Reset
Date, whichever is later.
(B)
is cumulative Purchase Payments received after the Rider Effective Date or the most
recent Reset Date, whichever is later.
Once a withdrawal has occurred, no annual credit will be applied to the Protected Payment Base and
Remaining Protected Balance on any Contract Anniversary following the withdrawal, unless you elect
to reset the Remaining Protected Balance. (See Election to Reset Remaining Protected Balance
provision of this Rider.)
Withdrawal of Protected Payment Amount – While this Rider is in effect, you may withdraw up to the
Protected Payment Amount without any adjustment to the Protected Payment Base, regardless of market
performance, until the Remaining Protected Balance equals zero.
If a withdrawal does not exceed the Protected Payment Amount immediately prior to that withdrawal,
the Protected Payment Base will remain unchanged. The Remaining Protected Balance will decrease by
the withdrawal amount immediately following the withdrawal.
Withdrawals Exceeding Protected Payment Amount – Except as otherwise provided under the Withdrawals
to Satisfy Required Minimum Distribution provision of this Rider, if a withdrawal exceeds the
Protected Payment Amount immediately prior to that withdrawal, we will adjust the Protected Payment
Base and Remaining Protected Balance immediately following the withdrawal to the lesser of:
(a)
the Contract Value immediately after the withdrawal; or
(b)
the Remaining Protected Balance immediately prior to the withdrawal, less the
withdrawal amount.
The amount available for withdrawal under the Contract must be sufficient to support any withdrawal
that would otherwise exceed the Protected Payment Amount.
Withdrawals to Satisfy Required Minimum Distribution – No adjustment will be made to the Protected
Payment Base if a withdrawal made under this Rider exceeds the Protected Payment Amount immediately
prior to the withdrawal, provided that such withdrawal (herein referred to as an “RMD withdrawal”)
is for purposes of satisfying the minimum distribution requirements of Internal Revenue Code
Section 401(a)(9) and related Code provisions in effect on the Rider Effective Date, and further
subject to the following:
(a)
you have authorized us to calculate and make periodic distribution of the Annual RMD
Amount for the Calendar Year required based on the payment frequency you have chosen;
(b)
the Annual RMD Amount is based on the previous year-end Contract Value of this Contract
only; and
(c)
no withdrawals (other than RMD withdrawals) are made from the Contract during the
Contract Year.
Each RMD withdrawal will decrease the Remaining Protected Balance by the amount withdrawn
immediately following the RMD withdrawal.
Depletion of Contract Value – If a withdrawal (including an RMD withdrawal) does not exceed the
Protected Payment Amount and reduces the Contract Value to zero, the following will apply:
(a)
if the oldest Owner (or youngest Annuitant, in the case of an Owner who is a
Non-Natural Owner):
(i)
was age 64 or younger when the first withdrawal was taken under this
Rider after the Rider Effective Date or the most recent Reset Date, whichever is
later, 5% of the Protected Payment Base will be paid each year until the Remaining
Protected Balance is reduced to zero; or
(ii)
was age 65 or older when the first withdrawal was taken under this Rider
after the Rider Effective Date or the most recent Reset Date, whichever is later,,5%
of the Protected Payment Base will be paid each year until the day of the first
death of an Owner or the date of death of the sole surviving Annuitant.
4
The payments under subparagraphs (a)(i) and (a)(ii) above will be made under a series of
pre-authorized withdrawals under a payment frequency, as elected by the Owner, but no less
frequently than annually;
(b)
no additional Purchase Payments will be accepted under the Contract;
(c)
any Remaining Protected Balance will not be available for payment in a lump sum and may
not be applied to provide payments under an Annuity Option; and
(d)
the Contract will cease to provide any death benefit.
If the Owner or sole surviving Annuitant dies and the Contract Value is zero as of the date of
death, any Remaining Protected Balance will be paid to the Beneficiary under the series of
pre-authorized withdrawals and payment frequency then in effect at the time of the Owner’s or sole
surviving Annuitant’s death.
Depletion of Remaining Protected Balance – If a withdrawal reduces the Remaining Protected Balance
to zero and Contract Value remains, the following will apply:
If the oldest Owner (or youngest Annuitant, in the case of an Owner who is a Non-Natural Owner):
(a)
was age 64 or younger when the first withdrawal was taken under this Rider after the
Rider Effective Date or the most recent Reset Date, whichever is later, this Rider will
terminate; or
(b)
was age 65 or older when the first withdrawal was taken under this Rider after the
Rider Effective Date or the most recent Reset Date, whichever is later, you may elect to
withdraw up to 5% of the Protected Payment Base each year until the day of the first death
of an Owner or the date of death of the sole surviving Annuitant.
If a withdrawal made under subparagraph (b) together with any other withdrawal (except an RMD
withdrawal) taken from the Contract exceeds the Protected Payment Amount, this Rider will
terminate.
Any death benefit proceeds to be paid to the Beneficiary from remaining Contract Value will be paid
as described under the Death Benefit provisions of the Contract.
Election to Reset Remaining Protected Balance – You may, on any Contract Anniversary beginning with
the first (1st) Contract Anniversary, measured from the Rider Effective Date or the most
recent Reset Date, whichever is later, elect to reset the Remaining Protected Balance to an amount
equal to 100% of the Contract Value as of that Contract Anniversary.
The annual charge percentage, as described in the Annual Charge provision, may change if you elect
to reset the Remaining Protected Balance. However, the annual charge percentage will never exceed
the annual charge percentage then in effect for new issues of this same rider. If we are no longer
issuing this rider, any change in the annual charge percentage will not result in an annual charge
percentage that exceeds the maximum annual charge percentage specified in the Annual Charge
provision. If the Remaining Protected Balance is never reset, the annual charge
percentage established on the Rider Effective Date is guaranteed not to change.
On each Reset Date and after any annual credit is applied, we will set the Protected Payment Base
and Remaining Protected Balance to an amount equal to 100% of the Contract Value as of that Reset
Date.
Your election to reset the Remaining Protected Balance must be received, in a form satisfactory to
us, at our Service Center within thirty (30) days after the Contract Anniversary on which the reset
is effective. Your election to reset the Remaining Protected Balance may result in a reduction in
the Protected Payment Base, Remaining Protected Balance, Protected Payment Amount and any annual
credit that may be applied. We will provide you with written confirmation of your election.
On and after each Reset Date, the provisions of this Rider shall apply in the same manner as they
applied when the Rider was originally issued. Eligibility for the annual credit, the limitations
and restrictions on Purchase Payments and withdrawals, the deduction of annual charges and any
future reset options available on and after the Reset Date, will again apply and will be measured
from that Reset Date.
5
Continuation of Rider if Surviving Spouse Continues Contract – If the Owner dies while this Rider
is in effect and if the surviving spouse of the deceased Owner elects to continue the Contract in
accordance with its terms, the surviving spouse may continue to take withdrawals of the Protected
Payment Amount under this Rider, until the Remaining Protected Balance is reduced to zero.
The surviving spouse may elect to reset the Remaining Protected Balance on any Contract
Anniversary. If an election to reset is made, then the provisions of this Rider will continue in
full force and in effect for the surviving spouse. (See Election to Reset Remaining Protected
Balance provision of this Rider.)
Termination of Rider – Except as otherwise provided under the Continuation of Rider if Surviving
Spouse Continues Contract provision of this Rider, this Rider will automatically terminate upon the
earliest to occur of one of the following events:
(a)
the day any portion of the Contract Value is no longer invested according to an asset
allocation program established and maintained by us for this Rider;
(b)
the day the Remaining Protected Balance is reduced to zero;
(c)
the day of the first death of an Owner or the date of death of the sole surviving
Annuitant;
(d)
the day the Contract is terminated in accordance with the provisions of the Contract;
(e)
the day we are notified of a change in ownership of the Contract; or
(f)
the Annuity Date.
This Rider will not terminate under subparagraph (b) above if the oldest Owner (or youngest
Annuitant, in the case of an Owner who is a Non-Natural Owner) was age 65 or older when the first
withdrawal was taken under this Rider after the Rider Effective Date or the most recent Reset Date,
whichever is later. In this case the Rider will terminate under subparagraph (c).
This Rider and the Contract will not terminate under subparagraph (d) above if at the time of this
event, the Contract Value is zero and we are making pre-authorized withdrawals of 5% of the
Protected Payment Base. In this case, the Rider and Contract will terminate under:
(i)
subparagraph (b) if the oldest Owner (or youngest Annuitant, in the case of an Owner
who is a Non-Natural Owner) was age 64 or younger when the first withdrawal was taken under
this Rider after the Rider Effective Date or the most recent Reset Date, whichever is
later: or
(ii)
subparagraph (c) if the oldest Owner (or youngest Annuitant, in the case of an Owner
who is a Non-Natural Owner) was age 65 or older when the first withdrawal was taken under
this Rider after the Rider Effective Date or the most recent Reset Date, whichever is
later.
Rider Effective Date – This Rider is effective on the Contract Date, unless a later date is shown
below.
Rider Effective Date: [Date]
All other terms and conditions of the Contract remain unchanged by this Rider.
PACIFIC LIFE INSURANCE COMPANY
Chairman and Chief Executive Officer
Secretary
6
ENHANCED GUARANTEED WITHDRAWAL BENEFIT RIDER
SAMPLE CALCULATIONS
The numeric examples shown in this section are based on certain assumptions. They have been
provided to assist in understanding the benefits provided by this Rider and to demonstrate how
Purchase Payments received and withdrawals made from the Contract prior to the Annuity Date affect
the values and benefits under this Rider over an extended period of time. These examples are not
intended to serve as projections of future investment returns.
Example #1 – No Subsequent Purchase Payments; No Withdrawals; No Reset in Remaining Protected
Balance.
The values shown below are based on the following assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
No subsequent Purchase Payments are received.
•
No withdrawals taken.
•
No reset in Remaining Protected Balance
Protected
Protected
Remaining
Beginning
Contract Value
Annual
Payment
Payment
Protected
of Contract Year
Purchase Payment
Withdrawal
after Activity
Credit
Base
Amount
Balance
1
$
100,000
$
100,000
$
100,000
$
5,000
$
100,000
2
$
103,000
$
6,000
$
106,000
$
5,300
$
106,000
3
$
106,090
$
6,000
$
112,000
$
5,600
$
112,000
4
$
109,273
$
6,000
$
118,000
$
5,900
$
118,000
5
$
112,551
$
6,000
$
124,000
$
6,200
$
124,000
6
$
115,927
$
6,000
$
130,000
$
6,500
$
130,000
7
$
119,405
$0
$
130,000
$
6,500
$
130,000
8
$
122,987
$0
$
130,000
$
6,500
$
130,000
9
$
126,677
$0
$
130,000
$
6,500
$
130,000
10
$
130,477
$0
$
130,000
$
6,500
$
130,000
11
$
134,392
$0
$
130,000
$
6,500
$
130,000
On the Rider Effective Date, the initial values are set as follows:
•
Protected Payment Base = Initial Purchase Payment = $100,000
Protected Payment Amount = 5% of Protected Payment Base = $5,000
Since no withdrawal occurred prior to the Contract Anniversary at the beginning of Contract Year 6,
an annual credit of $6,000 (6% of initial Remaining Protected Balance) is applied to the Protected
Payment Base and Remaining Protected Balance on each Contract Anniversary up to the Contract
Anniversary at the beginning of Contract Year 6. As a result, on the Contract Anniversary at the
beginning of Contract Year 6, the Protected Payment Base and Remaining Protected Balance are equal
to $130,000 and the Protected Payment Amount is equal to $6,500 (5% of $130,000).
No annual credit will be applied to the Protected Payment Base and Remaining Protected Balance on
any Contract Anniversary after the Contract Anniversary at the beginning of Contract Year 6, as no
reset in the Remaining Protected Balance was assumed.
In addition to the Initial Purchase Payment, the Contract Value is further subject to increases
and/or decreases during each Contract Year as a result of additional amounts credited, charges,
fees and other deductions, and increases and/or decreases in the investment performance of the
Variable Account.
7
ENHANCED GUARANTEED WITHDRAWAL BENEFIT RIDER
SAMPLE CALCULATIONS
Example #2 – Subsequent Purchase Payment.
The values shown below are based on the following assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
A subsequent Purchase Payment of $50,000 is received during Contract Year 2.
•
No withdrawals taken.
Protected
Protected
Remaining
Beginning
Contract Value
Payment
Payment
Protected
of Contract Year
Purchase Payment
Withdrawal
after Activity
Annual Credit
Base
Amount
Balance
1
$
100,000
$
100,000
$
100,000
$
5,000
$
100,000
2
$
103,000
$
6,000
$
106,000
$
5,300
$
106,000
Activity
$
50,000
$
154,534
$
156,000
$
7,800
$
156,000
3
$
156,834
$
9,000
$
165,000
$
8,250
$
165,000
On the Rider Effective Date, the initial values are set as follows:
•
Protected Payment Base = Initial Purchase Payment = $100,000
Protected Payment Amount = 5% of Protected Payment Base = $5,000
Since no withdrawal occurred prior to the Contract Anniversary at the beginning of Contract Year 2,
an annual credit of $6,000 (6% of initial Remaining Protected Balance) is applied to the Protected
Payment Base and Remaining Protected Balance on that Contract Anniversary, increasing both to
$106,000. As a result, the Protected Payment Amount on that Contract Anniversary is equal to
$5,300 (5% of the Protected Payment Base on that Contract Anniversary).
Immediately after the $50,000 subsequent Purchase Payment during Contract Year 2, the Protected
Payment Base and Remaining Protected Balance are increased by the Purchase Payment amount to
$156,000 ($106,000 + $50,000). The Protected Payment Amount after the Purchase Payment is equal to
$7,800 (5% of the Protected Payment Base after the Purchase Payment since there are no withdrawals
during that Contract Year).
Since no withdrawal occurred prior to the Contract Anniversary at the beginning of Contract Year 3,
an annual credit of $9,000 (6% of initial Remaining Protected Balance plus 6% of the $50,000
subsequent Purchase Payment) is applied to the Protected Payment Base and Remaining Protected
Balance on that Contract Anniversary, increasing both to $165,000. As a result, the Protected
Payment Amount on that Contract Anniversary is equal to $8,250 (5% of the Protected Payment Base on
that Contract Anniversary).
8
ENHANCED GUARANTEED WITHDRAWAL BENEFIT RIDER
SAMPLE CALCULATIONS
Example #3 – Withdrawal Not Exceeding Protected Payment Amount.
The values shown below are based on the following assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
No subsequent Purchase Payments are received.
•
A withdrawal of $5,000 is taken during Contract Year 2.
Protected
Protected
Remaining
Beginning
Contract Value
Payment
Payment
Protected
of Contract Year
Purchase Payment
Withdrawal
after Activity
Annual Credit
Base
Amount
Balance
1
$
100,000
$
100,000
$
100,000
$
5,000
$
100,000
2
$
103,000
$
6,000
$
106,000
$
5,300
$
106,000
Activity
$
5,000
$
99,534
$
106,000
$
300
$
101,000
3
$
101,016
$0
$
106,000
$
5,300
$
101,000
4
$
104,046
$0
$
106,000
$
5,300
$
101,000
On the Rider Effective Date, the initial values are set as follows:
•
Protected Payment Base = Initial Purchase Payment = $100,000
Protected Payment Amount = 5% of Protected Payment Base = $5,000
Since no withdrawal occurred prior to the Contract Anniversary at the beginning of Contract Year 2,
an annual credit of $6,000 (6% of initial Remaining Protected Balance) is applied to the Protected
Payment Base and Remaining Protected Balance on that Contract Anniversary, increasing both to
$106,000. As a result, the Protected Payment Amount on that Contract Anniversary is equal to
$5,300 (5% of the Protected Payment Base on that Contract Anniversary).
Because the $5,000 withdrawal during Contract Year 2 does not exceed the Protected Payment Amount
immediately prior to the withdrawal ($5,300):
(a)
the Protected Payment Base remains unchanged;
(b)
the Remaining Protected Balance is reduced by the amount of the withdrawal to $101,000
($106,000 — $5,000); and
(c)
the Protected Payment Amount is equal to $300 (5% of the Protected Payment Base after
the withdrawal (5% of $106,000 = $5,300), less cumulative withdrawals during that Contract
Year ($5,000)).
Since a withdrawal occurred during Contract Year 2, no annual credit will be applied to the
Protected Payment Base and Remaining Protected Balance on any Contract Anniversary following the
withdrawal.
9
ENHANCED GUARANTEED WITHDRAWAL BENEFIT RIDER
SAMPLE CALCULATIONS
Example #4 – Withdrawal Exceeding Protected Payment Amount.
The values shown below are based on the following assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
No subsequent Purchase Payments are received.
•
Two separate withdrawals of $5,000 and $3,000 are taken during Contract Year 2.
Protected
Protected
Remaining
Beginning
Contract Value
Payment
Payment
Protected
of Contract Year
Purchase Payment
Withdrawal
after Activity
Annual Credit
Base
Amount
Balance
1
$
100,000
$
100,000
$
100,000
$
5,000
$
100,000
2
$
103,000
$
6,000
$
106,000
$
5,300
$
106,000
Activity
Activity
$5,000
$3,000
$
$
99,534
97,272
$
$
106,000
97,272
$
300
$0
$
$
101,000
97,272
3
$
97,993
$0
$
97,272
$
4,864
$
97,272
4
$
100,933
$0
$
97,272
$
4,864
$
97,272
On the Rider Effective Date, the initial values are set as follows:
•
Protected Payment Base = Initial Purchase Payment = $100,000
Protected Payment Amount = 5% of Protected Payment Base = $5,000
Since no withdrawal occurred prior to the Contract Anniversary at the beginning of Contract Year 2,
an annual credit of $6,000 (6% of initial Remaining Protected Balance) is applied to the Protected
Payment Base and Remaining Protected Balance on that Contract Anniversary, increasing both to
$106,000. As a result, the Protected Payment Amount on that Contract Anniversary is equal to
$5,300 (5% of the Protected Payment Base on that Contract Anniversary).
Because the $5,000 withdrawal during Contract Year 2 does not exceed the Protected Payment Amount
immediately prior to the withdrawal ($5,300):
(a)
the Protected Payment Base remains unchanged;
(b)
the Remaining Protected Balance is reduced by the amount of the withdrawal to $101,000
($106,000 — $5,000); and
(c)
the Protected Payment Amount is equal to $300 (5% of the Protected Payment Base after
the withdrawal (5% of $106,000 = $5,300), less cumulative withdrawals during that Contract
Year ($5,000)).
Because the $3,000 withdrawal during Contract Year 2 exceeds the Protected Payment Amount
immediately prior to the withdrawal ($3,000 > $300), the Protected Payment Base and Remaining
Protected Balance immediately after the withdrawal are adjusted to the lesser of:
(a)
the Contract Value immediately after the withdrawal ($97,272); or
(b)
the Remaining Protected Balance immediately prior to the withdrawal, less the
withdrawal amount ($101,000 — $3,000 = $98,000).
The Protected Payment Amount immediately after the withdrawal is equal to $0 (5% of the Protected
Payment Base after the withdrawal (5% of $97,272 = $4,864), less cumulative withdrawals during that
Contract Year ($8,000), but not less than zero).
Since a withdrawal occurred during Contract Year 2, no annual credit will be applied to the
Protected Payment Base and Remaining Protected Balance on any Contract Anniversary following the
withdrawal.
10
ENHANCED GUARANTEED WITHDRAWAL BENEFIT RIDER
SAMPLE CALCULATIONS
Example #5 – Reset in Remaining Protected Balance.
The values shown below are based on the following assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
No subsequent Purchase Payments are received.
•
No withdrawals taken.
•
Reset in Remaining Protected Balance at the Beginning of Contract Year 4.
Protected
Protected
Remaining
Beginning
Contract Value
Payment
Payment
Protected
of Contract Year
Purchase Payment
Withdrawal
after Activity
Annual Credit
Base
Amount
Balance
1
$
100,000
$
100,000
$
100,000
$
5,000
$
100,000
2
$
110,000
$
6,000
$
106,000
$
5,300
$
106,000
3
$
121,000
$
6,000
$
112,000
$
5,600
$
112,000
4
$
133,100
$
6,000
$
118,000
$
5,900
$
118,000
(Prior to Reset)
4
$
133,100
$
133,100
$
6,655
$
133,100
(After Reset)
5
$
146,410
$
7,986
$
141,086
$
7,054
$
141,086
On the Rider Effective Date, the initial values are set as follows:
•
Protected Payment Base = Initial Purchase Payment = $100,000
Protected Payment Amount = 5% of Protected Payment Base = $5,000
On the Contract Anniversary at the beginning of Contract Year 4, the Contract Value ($133,100) is
greater than the Remaining Protected Balance ($118,000). With the reset in Remaining Protected
Balance, the Protected Payment Base and Remaining Protected Balance are set equal to the Contract
Value on that Contract Anniversary. As a result, the Protected Payment Amount is equal to $6,655
after the reset.
After the reset in Remaining Protected Balance, eligibility for any annual credit will be based on
the most recent Reset Date. That is, the annual credit may be added to the Protected Payment Base
and Remaining Protected Balance on up to five (5) additional Contract Anniversaries if certain
conditions are met.
The reset in Remaining Protected Balance may result in an increase in the annual charge percentage.
The reset in Remaining Protected Balance may also result in a lower Protected Payment Base,
Remaining Protected Balance, Protected Payment Amount and any annual credit that may be applied.
11
ENHANCED GUARANTEED WITHDRAWAL BENEFIT RIDER
SAMPLE CALCULATIONS
Example #6 – Lifetime Income
The values shown below are based on the following assumptions:
•
Initial Purchase Payment = $100,000
•
Rider Effective Date = Contract Date
•
No subsequent Purchase Payments are received.
•
Owner is age 65 or older when the first withdrawal was taken
•
Withdrawals, each equal to 5% of the Protected Payment Base are taken each Contract Year.
•
No reset in the Remaining Protected Balance is assumed during the life of the Rider.
Contract
End of Year
Annual
Protected
Protected
Remaining
Year
Withdrawal
Contract Value
Credit
Payment Base
Payment Amount
Protected Balance
1
$
5,000
$
96,489
$0
$
100,000
$
5,000
$
95,000
2
$
5,000
$
94,384
$0
$
100,000
$
5,000
$
90,000
3
$
5,000
$
92,215
$0
$
100,000
$
5,000
$
85,000
4
$
5,000
$
89,982
$0
$
100,000
$
5,000
$
80,000
5
$
5,000
$
87,681
$0
$
100,000
$
5,000
$
75,000
6
$
5,000
$
85,311
$0
$
100,000
$
5,000
$
70,000
7
$
5,000
$
82,871
$0
$
100,000
$
5,000
$
65,000
8
$
5,000
$
80,357
$0
$
100,000
$
5,000
$
60,000
9
$
5,000
$
77,768
$0
$
100,000
$
5,000
$
55,000
10
$
5,000
$
75,101
$0
$
100,000
$
5,000
$
50,000
11
$
5,000
$
72,354
$0
$
100,000
$
5,000
$
45,000
12
$
5,000
$
69,524
$0
$
100,000
$
5,000
$
40,000
13
$
5,000
$
66,610
$0
$
100,000
$
5,000
$
35,000
14
$
5,000
$
63,608
$0
$
100,000
$
5,000
$
30,000
15
$
5,000
$
60,517
$0
$
100,000
$
5,000
$
25,000
16
$
5,000
$
57,332
$0
$
100,000
$
5,000
$
20,000
17
$
5,000
$
54,052
$0
$
100,000
$
5,000
$
15,000
18
$
5,000
$
50,674
$0
$
100,000
$
5,000
$
10,000
19
$
5,000
$
47,194
$0
$
100,000
$
5,000
$
5,000
20
$
5,000
$
43,610
$0
$
100,000
$
5,000
$0
21
$
5,000
$
39,918
$0
$
100,000
$
5,000
$0
22
$
5,000
$
36,115
$0
$
100,000
$
5,000
$0
23
$
5,000
$
32,199
$0
$
100,000
$
5,000
$0
24
$
5,000
$
28,165
$0
$
100,000
$
5,000
$0
25
$
5,000
$
24,010
$0
$
100,000
$
5,000
$0
26
$
5,000
$
19,730
$0
$
100,000
$
5,000
$0
27
$
5,000
$
15,322
$0
$
100,000
$
5,000
$0
28
$
5,000
$
10,782
$0
$
100,000
$
5,000
$0
29
$
5,000
$
6,105
$0
$
100,000
$
5,000
$0
30
$
5,000
$
1,288
$0
$
100,000
$
5,000
$0
31
$
5,000
$0
$0
$
100,000
$
5,000
$0
32
$
5,000
$0
$0
$
100,000
$
5,000
$0
33
$
5,000
$0
$0
$
100,000
$
5,000
$0
34
$
5,000
$0
$0
$
100,000
$
5,000
$0
12
ENHANCED GUARANTEED WITHDRAWAL BENEFIT RIDER
SAMPLE CALCULATIONS
Example #6 – Lifetime Income (continued)
On the Rider Effective Date, the initial values are set as follows:
•
Protected Payment Base = Initial Purchase Payment = $100,000
Protected Payment Amount = 5% of Protected Payment Base = $5,000
Because the amount of each withdrawal does not exceed the Protected Payment Amount immediately
prior to the withdrawal ($5,000): (a) the Protected Payment Base remains unchanged; and (b) the
Remaining Protected Balance is reduced by the amount of each withdrawal.
Since a withdrawal occurred during Contract Year 1, no annual credit will be applied to the
Protected Payment Base and Remaining Protected Balance on any Contract Anniversary following the
withdrawal.
Since it was assumed that the Owner was age 65 or older when the first withdrawal was taken,
withdrawals of 5% of the Protected Payment Base will continue to be paid each year (even after the
Contract Value and Remaining Protected Balance have been reduced to zero) until the day of the
first death of an Owner or the date of death of the sole surviving Annuitant, whichever occurs
first.
